INSURERS including the Prudential could face a barrage of complaints from past policyholders, claiming they have been short-changed, as companies attempt to uncover and pay out billions of pounds of "orphan assets" to shareholders and current policyholders.

Millions of past holders of savings policies such as endowments may have been underpaid by thousands of pounds to fund the companies' treasure chests, insurance experts are suggesting. To date, those past customers have been left out of deals on these assets.

Robert Wharton, a solicitor at the Bristol-based firm Ringrose Wharton, which specialises in financial services litigation, said ex-policyholders might have a case against insurers, perhaps in the form of group actions.

The issue has arisen as increasing numbers of insurers seek to quantify and divide surplus monies held in their funds between shareholders and policyholders. The Prudential, the UK's biggest insurer, last week said it was in talks with the Department of Trade and Industry about its orphan assets, which analysts say could amount to between pounds 1bn and pounds 5bn.

In many cases, say consultant actuaries, much of these surpluses has been built up by insurers paying policyholders less than their entitlement, either by penalising them when they cashed in policies such as endowments early or because their policy returns at maturity were at the discretion of the insurer.

Prudential this weekend claimed its orphan assets were "nothing to do with policyholders being underpaid in the past". Its talks with the DTI could last up to 18 months. The DTI's role, as regulator of insurers, is to protect the "reasonable expectations" of policyholders in any move on orphan assets.

Legal & General confirmed that the pounds 1.5bn of surplus assets it identified in November as belonging to policyholders came from old customers. Last week, it announced it would distribute pounds 163m of this in a special bonus to current - but not past - policyholders. But it noted that this surplus had been built up over the 160 years of the insurers' existence and that "most [past policyholders] are now dead". Furthermore, it said, these old customers had benefited from the insurer's increased financial stability as a result of these retained funds.

Similarly, previous moves on orphan assets by United Friendly, Refuge and Britannic made no provision for past policyholders.

"Previous generations [of policyholders] may reasonably feel aggrieved," said David Beale, joint managing director of Beale Dobie, a firm that buys and sells endowment policies that are midway through their term.

Options for complaining are limited, however. Financial ombudsmen say complaints about short-changing or being left out out of any orphan assets split are not part of their remits. The Personal Investment Authority Ombudsman, Stephen Edell, said: "Basically, you can't complain - apart from through the courts."

Mr Wharton at Ringrose Wharton said the terms of any policy contract would be very important in deciding whether past policyholders had a case. He added that past policyholders of mutual insurers would be likely to have a better claim than those of quoted insurers, because of the absence of shareholders.

With quoted insurance companies such as the Prudential, shareholders have in many cases helped build up the orphan assets through injections of capital and by not taking their due entitlements to profits from insurers' funds. Insurance experts say the mix of the surplus varies from company to company and can be difficult to untangle.